Europe's industrial base is facing a dual crisis of competitiveness and carbon intensity. Indeed, the continent’s over-reliance on imported fossil fuels has left industries vulnerable to high energy prices and price volatility, especially for energy-intensive sectors.
At the same time, decarbonisation pressures are mounting, with the effects of climate change becoming ever more evident and much-needed EU climate targets pushing for transformation.
In this global context, electrification is rapidly emerging not just as a climate imperative, but as a strategic solution to Europe's industrial competitiveness woes. A brand new Eurelectric study, 'The new industrial age; Tailored electrification pathways for Europe's industrial competitiveness1', shows how for many sectors, the business case for switching to clean electricity is already quite compelling — and it will only strengthen as technologies mature and grids continue to decarbonise. Thus, seizing this growing momentum could redefine Europe's industrial future and restore its competitive edge in an increasingly decarbonising world.
Electrification, a competitiveness game changer,
Our reliance on imported fossil fuels cost Europe €350 billion in 2024 (€451 billion in 2023), undermining competitiveness and exposing energy-intensive industries to volatile markets. Our study reveals that for processes below 500°C — such as battery cell manufacturing — electric heat pumps and boilers are already beating fossil alternatives when it comes to the total cost of ownership, while even sectors like milk powder production are lowering energy consumption and costs through direct electrification.
Although high temperature processes await further technological advances, scaling electrification across low and medium temperature uses could already substantially shrink Europe's fossil fuel import bill, bolster trade balance savings and save industry. Seen in this light, electrification is not just a decarbonisation tool, but also a strategic game changer for European competitiveness and innovation leadership.
Clean tech already has a business case for electrification
This early "in-the-money" reality also extends to medium-intensity sectors, where direct electrification can cut both energy use and costs compared to oil and gas. These findings underscore that mature electric technologies are no longer niche pilots but are instead commercially viable solutions, turning decarbonisation investments into immediate competitiveness gains. As Europe accelerates grid decarbonisation, the business case will only strengthen, creating virtuous circles between cleaner power and industrial growth.
Medium & high heat processes need more time
While low-temperature applications are already cost-competitive, medium-heat processes (200–500°C) in many Member States will only reach profitability around 2030, as technology costs decline and learning-curve effects kick in. Variations in national energy mixes mean some countries will hit this tipping point earlier than others, a reality that underscores the need for tailored timelines. High-temperature sectors — such as ethylene cracking and metallurgical furnaces — face steeper hurdles: today's electric solutions carry higher capital expenditures and require further R&D, pilot deployments and scaling support before they can out-compete fossil alternatives.
Policymakers must therefore combine innovation incentives, targeted funding and clear roadmaps to ensure these critical segments join the electrification journey in the decade ahead.
What is it going to take
Accelerating industrial electrification requires more than just the technology – it demands a robust enabling framework. First, industries need access to tailored financial instruments such as Carbon Contracts for Difference (CCfDs) and Power Purchase Agreements (PPAs) to de-risk investments and lock in predictable energy costs. Second, grid infrastructure must be rapidly upgraded at the low and medium voltage levels to handle new electric loads, improve connection times and unlock flexibility services. Finally, Member States must align incentives by phasing out fossil fuel subsidies, adjusting energy taxation to favour clean electricity, and implementing sector-specific electrification strategies. Without coordinated support across these fronts, the switch will remain out of reach for much of industry.
An ecosystem approach: industry can't do it alone
Indeed, electrifying Europe's industry isn't just a matter of swapping boilers – it is going to require a well-coordinated ecosystem of stakeholders. Energy producers must accelerate renewables deployment to drive down wholesale power costs, while grid operators need smart-grid upgrades and flexibility markets to manage increased loads and two-way flows. Regulators and policymakers must align incentives – phasing out fossil fuel subsidies, reforming taxes and embedding electrification targets in national strategies – to send clear investment signals. Industrial users, in turn, should engage in long-term off-take agreements to secure price stability and bankable business cases. Only through this "Team Europe" approach can we bridge technology, finance and infrastructure gaps — and ensure that no link in the value chain is left behind.
Europe must act, or fall behind
Although it has been repeated to the point of ad nauseam, it remains true that Europe is at a pivotal moment: clinging to fossil fuels exposes our industries to volatile prices and erodes competitiveness, whereas electrification will offer an already proven path to cost savings and resilience. Business as usual will only widen the innovation gap as global rivals deploy clean-power strategies. To seize the upcoming new Industrial Age, we must implement targeted policies – tailored sectoral roadmaps, PPAs and CCfDs, grid upgrades and R&D support – to scale low-temperature solutions and drive breakthroughs for high-heat processes. The time for incremental change has passed: Europe must mobilise its full ecosystem now or risk forfeiting its industrial leadership once and for all.
1. https://powersummit2025.eurelectric.org/industrial-competitiveness/
2. https://energy-security.eurelectric.org/